One reason for this, he said, was that Malaysia’s regulatory framework for the bond market was less rigid than that of its immediate neighbours. Rather, he added, it was more conducive for investors.
The Malaysian Reserve (TMR) quoted him as saying: “Other countries’ stringent bond issuance policy actually restricts interested parties to purchase some of the bonds issued out.”
He was speaking to reporters on the sidelines of the Asean Capital Markets Forum (ACMF) 2017 in Kuala Lumpur yesterday.
TMR quoted Khoo as saying tax relief for institutional and retail investors would further spur growth in the domestic green bonds market.
“The tax break is also expected to translate into better pricing of green bonds, which would be a positive sentiment to kick-start this segment of the bond market.
“Any form of adequate incentive would be sufficient to stimulate the market. It doesn’t have to be large in value.
“However, once it gets to a substantial amount, the taxes can either be withdrawn or moved into different types of green bonds, along with the incorporation of technologies,” Khoo was quoted as saying.
Malaysia’s overall capital market size stands at RM2.85 trillion while equity market capitalisation stands at RM1.68 trillion. The bond and sukuk market expanded to RM1.17 trillion, the report said.
According to Securities Commission Malaysia data, assets under management rose by 4.8% to RM700 billion, while unit trust net asset value stood at RM356 billion in September.
It was recently reported that Malaysia would issue more green sukuk to finance environmental-friendly infrastructure projects, and subsequently bolster its position as the key driver in the green Islamic financial market.
Green sukuk are shariah-compliant investments in renewable energy and other environmental assets.
In July this year, Malaysia, through Tadau Energy, issued the world’s first green sukuk – the RM250 million Sustainable Responsible Investment sukuk – to finance the construction of a large-scale solar project in Kudat, Sabah.
Following the launch of the Asean Green Bond Standards yesterday, ACMF chairman Ranjit Ajit Singh said green financing in Asean with global green bond issuances was projected to increase to RM4.23 trillion by 2020.